Nokia 2010 Annual Report Download - page 18

introduced late, or when introduced, do not offer technologies that developers are willing to
use.
• We may not succeed in creating business models which provide value to all participants in the
ecosystem, including ourselves.
• We may not succeed in reducing our smartphone operating expenses, including our research
and development costs, which will impair our ability to create a profitable business model for
a new global ecosystem.
• We may not be able to change our mode of working or culture sufficiently to collaborate
effectively and efficiently both internally and externally with a large community of partners.
• We may not succeed in making the Nokia brand more desirable than brands of our competitors
in smartphones.
• We may not be able to attract developers and other participants to our ecosystem if they do
not have the opportunity to leverage their offerings across a wide range of mobile products,
particularly tablets, which we currently do not have in our mobile product portfolio.
We may not be able to produce mobile phones in a timely and cost efficient manner with
differentiated hardware, localized services and applications.
The mobile phones market, a traditional area of strength for us, is also undergoing significant
changes. Today, a different type of ecosystem from that of smartphones is emerging around mobile
phones involving very low cost components and manufacturing processes. Speed to market and
attractive pricing are critical success factors in the mobile phones market. In particular, the availability
of complete mobile solutions chipsets from MediaTek has enabled the very rapid and low cost
production of mobile phones by numerous manufacturers in the Shenzhen region of China, which
have gained significant share in emerging markets. Moreover, many midrange to lowend mobile
phones increasingly offer access to the Internet and mobile applications and provide more
smartphonelike experiences. Accordingly, we need to provide mobile phones in a timely and cost
efficient manner with differentiated hardware, localized services and applications that attract new
users and connect new and existing users to their first Internet and application experience. Our ability
to achieve this is subject to certain risks and uncertainties, including the following:
• We may not be able to leverage our traditional competitive strengths of scale in manufacturing
and logistics, as well as in our marketing and sales channels, to significantly increase the
speed to market of our mobile phones in a sufficiently costcompetitive manner, particularly
with mobile operators and consumers requiring increasing customization to meet divergent
local needs and preferences.
• We may be unable to source the right amount of components and at affordable cost.
• The platforms that we deploy for our mobile phones may not provide sufficient flexibility and
cost efficiency for application developers and other partners to create a vibrant ecosystem for
mobile phones with increasingly smartphonelike experiences of Internet access and mobile
applications.
• We may need to make significant investments to further develop our mobile phone platforms
in order to bring an upgraded mobile experience to traditional mobile phone consumers.
• We may not succeed in innovating and developing sufficiently locally relevant services,
applications and content in a speedy and costefficient manner to attract and retain consumers
in multiple markets with divergent local needs and preferences.
• Our brand preference may erode due to various factors, such as inadequate marketing, quality
issues, lack of affordable locallyrelevant services, applications and content or lack of success in
smartphones.
• Our management attention in smartphones and in the establishment of the new ecosystem for
17